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Fuel Cost to Go Up for Most in April 2012

Indonesian Government to End Fuel Subsidies for Private Vehicles Effective April 1, 2012.

(12/21/2011) Effective April 1, 2012, the government will outlaw the use of premium gasoline for private vehicles, according to a statement issued by the Vice-Minister for Energy and Natural Resources, Widjajono Partowidagdo, on December 15, 2011, as reported by Kompas.com.

The move is intended to reduce the large subsidies paid by the government for public fuel consumption. Widjiaono said the new policy would be introduced in stages; first in Jakarta and then to be followed by Jabodetabek, Java and Bali.

At the present time no decision has been made on vehicles powered by diesel fuel with the government promising to announce its intention in that area shortly.

“The main point is that beginning April 1st private cars can no longer use premium gas and if you want to use a private vehicle then you’re fuel is Pertamax,” proclaimed Widjajono.

Subsidized premium current costs Rp. 4,500 (US$0.50) per liter in Bali while Pertamax non-subsidized fuel costs Rp. 8,900 (US$0.98) per liter. This will translate into a 98% increase in fuel costs for private vehicle operators who normally fill up at the premium pump.

Partowidagdo told the press that now was the right time to end subsidized fuel for private vehicles because of the good condition of the Indonesian economy, a low inflation rate and the growing burden the cost of subsidized fuel represents to the national budget.

It is not clear exactly at this point what constitutes a “private vehicle” under the new directive and whether the substantial jump in cost from premium fuel to Pertamax will be done all at once or in phases over an extended period of time.